COMBINED TRUE NORTH, BOZELL IN A BUYING MOOD

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True North Communications will search for more acquisitions following last week's long-expected $440 million deal for Bozell, Jacobs, Kenyon & Eckhardt.

But first came a move in the opposite direction, as Chicago-based True North's Foote, Cone & Belding agency had to resign its $240 million Mazda Motor of America account.

CHRYSLER A STICKING POINT

The key account of BJK&E's Bozell Worldwide is Chrysler Corp., which objected to a linkup with an agency holding company involved with Ford Motor Co. And Ford, which owns 33.4% of Mazda and has operating control, also raised concerns about seeing FCB even indirectly linked with Chrysler.

True North most likely will seek global and international agencies to fill in its networks overseas, where gaps remain even after the Bozell purchase.

"The reality is these two companies are much stronger and are in a much better position to make acquisitions," said True North Chairman-CEO Bruce Mason, who will remain CEO after the merger.

SHOPPING AGAIN IN FALL

An executive close to True North said the holding company will look at acquisitions in the fall; the Bozell buy is expected to close by early November. Potential targets, according to the executive, include Cordiant units Bates Worldwide and Saatchi & Saatchi Advertising Worldwide, which should complete their own split by the end of the year.

True North also could do spot acquisitions in Europe similar to Wilkens International, the German agency acquired earlier this year.

PEEBLER'S STAKE

In the stock transaction, shareholders of the acquired company will have approximately 40% of the stock in TN, with BJK&E President-CEO Charles Peebler's stake estimated at $30 million to $40 million, according to industry executives.

Bozell will be a second ad agency network in True North's stable.

The merged holding company will have $11.5 billion in billings and $1.2 billion in annual revenues, according to executives of the two companies. That would make it the sixth-largest ad agency organization in the world, the executives said.

Mr. Peebler, 61, becomes president of both True North and chairman-CEO of True North Diversified Cos., a unit that will house interactive shops TN Technologies and Bozell's Poppe Tyson.

Those two interactive units "will operate independently at this point in time," said Mr. Mason.

But an industry executive said the two likely will be brought together after the merger closes, and spun off into a public company. Bozell had planned an IPO of Poppe Tyson, and True North had filed registration documents to offer TN Technologies to the public-but neither materialized.

ATTRACTIVE DUO

The two will make a more attractive offering than either could separately, according to industry observers.

Richard Braddock, a True North outside director and former president of Citicorp, will become non-executive chairman of the holding company. He is looked at as a cushion between Messrs. Mason, 57, and Peebler, who could eventually gain the top spot.

While Mr. Peebler and the other BJK&E shareholders wanted to cash in their stakes, Mr. Mason had staked his tenure at True North on adding a second network. That had become imperative after the collapse of a joint venture with Publicis Communication, Paris. The separation from Publicis became final this year, although TN retained a 26.5% stake in the French company and Publicis kept a 20% interest in True North.

The BJK&E deal came with a hefty price tag, which surprised some industry observers. Earlier in the process, Omnicom Group, encouraged by mutual client Chrysler Corp. to bid for BJK&E, balked at paying more than $300 million, leading BJK&E to reject the offer.

IPG DEAL DEAD?

Interpublic Group of Cos. reportedly has been interested in acquiring True North, although IPG executives denied it would approach True North as long as 20% remained in the hands of Publicis. That stake will be diluted to approximately 15% after the merger.

But the deal makes it less likely that IPG will bid for True North, since General Motors Corp. is a client of IPG agencies Campbell-Ewald, Ammirati Puris Lintas and McCann-Erickson Worldwide.

Industry observers said GM made it clear to IPG that while it would tolerate being under the same holding company with Mercedes-Benz, a Lowe & Partners/SMS client, it would not tolerate any other conflicts.

Bozell's Chrysler account would be an insurmountable obstacle.

Contributing: Rick Klein

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